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Wednesday, August 19, 2009

Extortion Efforts For Pacers Stepped Up

Indianapolis city leaders assured us that a $15 million dollar a year subsidy for the Indiana Pacers was off the table when City-County Councilors last week voted on a $21 million a year tax, spend and borrow bailout scheme for the Capital Improvement Board. Three days later, we learned that was a big fat lie meant to throw off opposition to the bailout plan. The IBJ's Anthony Schoettlerenews those discussions on his blog today. I'm not sure whether the extortionist in this case is CIB Vice President Pat Early, who obviously doesn't represent the public's interest on the CIB, or the Simons. Schoettle writes:

The city’s Capital Improvement Board, which owns ConsecoFieldhouse, is still trying to figure out what to do about the Indiana Pacers’ request for financial aid to the tune of $15 million for the upcoming year.

The money is not allocated in the CIB budget approved by the City-County Council earlier this month, but the issue is not dead yet.

“We’re dealing with things one at a time,” said CIB member Pat Early, who has been the point person in dealing with the Pacers. “To say absolutely, positively, the Pacers are on their own is not an accurate statement. As we work through this, we are hopeful we can be creative.”

I’m not sure what “be creative” means, and I’m not sure Early does either. But Early added that there’s no thought that the financial problems facing the small market Pacers “will simply go away.”

“The Pacers are desperate to seek solutions to get themselves closer to break even,” Early said. “We’re not closing the door on anything.”

Early gave no indication where the funds would come from, but he did say the possibility of the Pacers’ folding or moving if this situation isn’t eventually addressed is a real one. He said the team’s ownership has not made any threats or comments about moving or folding the franchise, but the team’s financial challenges dictate city leaders consider that possibility.

“Then we still have all the costs associated with owning and operating that facility and no one left to occupy or operate it,” Early said.

Either Pat Early is the worst negotiator on the face of the earth, or he is orchestrating an extortion plot against the public on behalf of the Simons to get the additional money they want to subsidize their NBA franchise--the additional money the Pacers' management deny they ever requested I might add. The more than $400 million Indianapolis taxpayers have forked over to help the Simons build their business fortune over the years just won't cut it. The CIB's current board is scheduled to be replaced next January. You can bet every effort will be made to pull off this give-away prior to the seating of a new board.

Instead of worrying about how the taxpaying public can help the Simons purchase another $25 million mansion in Bel-Air, city leaders might focus their attention on a real threat to downtown's economic future. Vacancy rates are approaching a high-water mark not seen since the early 1990s before Circle Centre Mall opened. Safeco is abandoning space on North Meridian Street now occupied by 580 employees, who are being located to the City's far northside. Eli Lilly is contracting its Indianapolis-based employment and planning to lease out space in the Faris Building. Lilly's headcount at its downtown facilities is down several thousand from five years ago. "Departures by Safeco and Lilly would dump nearly 1 million square feet of office space-the equivalent of another Chase Tower-onto a market segment that already is reeling," the IBJ's Cory Schouten reports. "Observers say office-vacancy rates could exceed the 23-percent peak of the early 1990s before the market levels off," he adds. The continued loss of downtown jobs has a much greater economic impact on downtown than the Pacers. Has somebody figured out yet that businesses don't choose to locate downtown because there is a professional football or basketball team that plays there?

8 comments:

I think it is naive to say companies don't keep companies somewhere or move them somewhere because of a professional sports team. Who runs companies? A bunch of wealth executives who want cool stuff for their friends to do. If the choice is locate in Columbus, Ohio or Indianapolis, I can actually see a CEO feeling there is "more to do" in Indianapolis. Nobody wants to confront this part of capitalism - that we have always and will always - kowtow to millionaires and their hobbies.

That must explain why so many companies located in the Silicon Valley and Austin, Texas, even though there were no professional sports teams there. If the Colts or Pacers were that big of a deal to Safeway, the company would have stayed downtown instead of moving to the far northside.

I've read the Pacers contract. Although the pertinent paragraph is single spaced and stretches out over three pages, it looks like to me that the 10 year early termination provision only applies:

1) if the Pacers are losing money.2) the Simons sell the team; and3) the team relocates.

Even if those three conditions apply to give the Simons an early out, they still have to pay penalties equal the first year to 50% of what the team sells for. There is another alterantive penalty but it pretty closely approximates that penalty. The Pacers appear to have no leverage whatsoever.

If the Pacers leave and the occupancy rate in the business buildings is over 70% because of the business those companies do the city of Indianapolis would collect far more taxes of income, sales and property taxes than the ticket prices for the Pacers.

This should be about the business climate in Indianapolis and not about the ball climate. Lilly was here far before the Pacers and Colts,

The money being thrown at the CIB should be directed towards a group leading the way to bring business to Indianapolis. Lilly made it without the Colts and Pacers. The excuse the business will only move to Indianapolis because sports teams give them something to do is lame.

Give the business owners economic incentive, promote the true and long standing positive things about Indiana of strong work ethic, great universities, strong and vibrant state parks, the self paying Indianapolis 500, Brickyard and other events by tax paying citizens.

Companies move because of quality of life and not just $50.00 tickets, $4.50 hotdogs and $5.00 beer.

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